Research and experimental exÂpenses that are unrelated to the curÂrent product lines or manufacturing processes of a trade or business are, nevertheless, research and experiÂmental expenditures within the meaning of section 174 of the Code.
Rev. Rul. 71-162
The taxpayer paid or incurred reÂsearch and experimental expenditures in seeking to develop new products or processes although they were unrelated to the current product lines or manuÂfacturing processes of the taxpayer’s trade or business. Research and experiÂmental expenditures described in secÂtion 174 of the Internal Revenue Code of 1954 and the regulations thereunder may be deducted, at the election of the taxpayer, if paid or incurred in conÂnection with the taxpayer’s trade or business.
Held, research and experimental exÂpenditures for new products or procÂesses, that are not related to the current product lines or manufacturing procÂesses of the taxpayer’s trade or business, are, nevertheless, research and experiÂmental expenditures within the meanÂing of section 174 of the Code and the regulations thereunder. See Best UniÂversal Lock Co., Inc., et al. v. CommisÂsioner, 45 T.C. 1 (1965), acquiescence, C.B. 1966-2, 4, in which it was held as to the issue in this case that the amounts expended by a taxpayer, a manufacturer and seller of locks, for research and development of products not related to locks, were research and experimental expenditures within the meaning of section 174 of the Code.